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South West Region Appoints Founding Head                                                  Read Less: Know More  Central Bank Approves Dashen VP Appointments

                 The newly-formed South Western regional council has elected                                    The central bank has given the nod of approval to Dashen Bank's recent
                 Negash Wagesho (PhD) as deputy head of the country's newest                                    appointment of five executives as vice presidents.
                 regional state.
                                                                                                                Dashen has been going through a managerial reshuffle in line with its strategic
                 Negash Wagesho has served as a state minister for Water‚                                       plan. The appointments also come following the recent departure of two senior
                 Irrigation & Energy. Recently, he was re-appointed as a state                                  executives to lead industry entrants. Henok Kebede and Yared Mesfin left their
                 minister for Water & Energy by Prime Minister Abiy Ahmed (PhD).                                posts at Dashen to become the founding presidents of Amhara and Tsehay
                                                                                                                banks, respectively.
The region's council held its first inaugural assembly last week and appointed
a house speaker and deputy speaker. During the assembly, the 52 member                                          With the approval of regulators at the central bank, Yohannes Million, who
council passed decisions pertaining to the structuring of the region.                                           previously served as Dashen's vice president of digital banking, has been
                                                                                                                appointed chief digital banking officer. Similarly, Ayele Teshome, Eyerusalem
The South West Regional State came into being following a referendum held in                                    Wagaw, Mesfin Bezu and Mulugeta Alebachew have also secured vice-
September this year. About 98pc of the 1.3 million voters registered cast their                                 presidential posts at Dashen.
ballots in favour of the region's formation. The referendum was held Bench
Sheka, South Omo, Kafa, and Sheko zones as well as Dawro Special District in                                    Following the general assembly held two weeks ago, the Bank's shareholders
the Southern Regional State                                                                                     have decided to raise Dashen's paid-up capital to 12 billion Br. The figure stood
                                                                                                                at 5.4 billion Br at the end of the last fiscal year, meeting the central bank's
During its first extraordinary assembly held on October 30, 2021, the upper                                     minimum threshold requirements.
house of parliament approved the formation of the country's 11th regional state.

NE W S                                                                                                                                 The political developments
                                                                                                                                       in Ethiopia are concerning
Page-6            Even with the Current . . .                                                                                          but youth unemployment still
                                                                                                                                        needs to be addressed. It is                            Page 11
Fortune
                                                                                                                                       at least partly a contributor
                                                                                                                                       to the political situation in the
Vol. 21 No. 1126                                                                                                                                                                      country.

Nov. 28, 2021
Bunna Relishes                                                                                                                         Newfound
Life Insurance Success

                  Only 10 insurance companies offer long-term insurance policies

     By TSION HAILEMICHAEL                    Despite years of single-digit growth, the   the industry can do more with life           culture and public consciousness change.       has submitted a proposal to engage in the
                                              premiums generated by the long-term         insurance, coming out of a somewhat                                                         long-term insurance business, awaiting
     FORTUNE STAFF WRITER                     insurance business increased by 13pc        "disappointing" backdrop over the past       “An increasing number of people are            approval from regulators at the NBE.
                                              to 579 million in 2019/20. The figure       20 years. Ebsa attributed the growth in      becoming more conscious about their
The executives of Bunna Insurance S.C.        jumped 67pc last year, almost reaching      recent years mainly to a rise in group life  future due to the COVID-19 pandemic,"          "We`ve submitted the required
are basking in the instant success of a life  one billion Birr.                           insurance policy sales. It is conventional   the broker told Fortune.                       documents two weeks ago," Kassa
policy as the firm recorded 8.5 million                                                   for most international organisations and                                                    Lisanework, CEO of Tsehay Insurance,
Br in gross premiums in the two months        Private firms are leading the pack, with    NGOs based in Ethiopia to buy group life     Close to 56pc of the premiums earned           told Fortune.
since it began offering the insurance         Awash Insurance registering 325.5           insurance policies for their employees,      by Awash in the long-term business
product. The figure is nearly three times     million Br in life premiums last year, a    according to Ebsa.                           came from COVID-19 travel insurance            Bunna Insurance, operating with a
what the company's management had             growth of 173pc. United Insurance saw                                                    policies, which covers the cost of medical     paid-up capital of 173.5 million Br,
forecast for the entire fiscal year and       premiums for life insurance grow to 71.3    Ebsa's observation is reflected in the       expenses brought on by the pandemic            has executives keen to capitalise on the
far outstrips previous industry records.      million Br over the same period, jumping    performance of Bunna Insurance, where        while travelling. In their annual report       firm`s newfound success. The company
                                              by 56pc, and Nile Insurance recorded a      group life insurance policies are a key      released recently, executives of Nile          has thus far been conducting life
Bunna Insurance, incorporated in              20pc increase to 57.9 million Br.           element of the firm's success.               Insurance have outlined the importance         insurance business without agents, but
2013, was engaged solely in selling                                                                                                    COVID-19 related products have on the          it is working to change that, according
non-life insurance policies before an         Industry insiders see room to grow the      Others in the industry see different         growing life insurance premiums.               to Endalkachew.
application to involve in the long-term       life insurance line of business further.    reasons for the sudden rise in the demand
insurance business was approved by                                                        for life insurance products. An insurance    This pushes others in the industry to          "We're in the process of recruiting," he
the National Bank of Ethiopia (NBE)           Ebsa Mohammed, an insurance expert          broker working for Abat Insurance            diversify their portfolios.                    disclosed. Bunna Insurance netted 34.6
in September this year. The firm began        and manager at Alpha Consultancy,           Brokers & Consultants observed a shift in                                                   million Br in profits last year.
offering ordinary, group, endowment           praises Bunna's achievement. He believes                                                 Tsehay Insurance, incorporated in 2012,
and mortgage life insurance the
following month. A feasibility study was      Roads Authority Lifts Embargo . . . (Cont'dfrom PAGE1)
conducted before launching the product.
Bunna Insurance's executives did not          advance payment guarantee issued            current fiscal year.                         guarantees, which are payable on               and the Authority often end up in court.
expect more than three million Birr in                                                    The performance guarantee Tsehay             demand. Regulators at the central bank
premiums in the first year, according to      in favour of Akir Construction dropped.     Insurance provided to Kif Construction,      brought the unconditional bonds to             A legal battle between ERA and United
Endalkachew Tesfaye, claims manager.          “We've been renewing the guarantee          which was hired to complete part of          an end, seeing an alarming increase in         Insurance was fought for seven years over
                                              based on the contractor’s performance,”     the road between Mazorai and Durki           claims.                                        a performance guarantee bond issued
"The study showed the business was            said Kassa Lisanework, CEO of Tsehay        but has failed to do so on schedule, is                                                     on Tibeb Construction's behalf. The case
nascent," Endalkachew told Fortune.           Insurance, which netted profits of 32.8     an outstanding issue with the Authority.     Banks can issue both conditional and           went to the Supreme Court before United
"But there is an untapped market              million Br last year.                       However, discussions are ongoing,            unconditional guarantees.                      paid out 55 million Br to the Authority
opportunity."                                 However, Akir Construction stopped          according to Kassa.                                                                         in January 2021, marking one of the
                                              the work in January 2019 while the          "There are issued we need to sort out,"      Financial institutions issuing these bonds     largest settlements ever paid by a private
No private insurance company had              project was 94pc complete. The Authority    Kassa told Fortune.                          need to hold sufficient collateral to shelter  insurance company in Ethiopia.
previously generated more than 2.3            demanded Tsehay to pay out the bond, an     Disputes over guarantee bonds have           themselves from risk, says Abebe Dinku
million Br from the long-term insurance       issue of contention between the insurer     become regular, leading the Authority        (Prof.), construction materials and            “The disputes arise mostly due to a lack of
business in the first year of operation.      and the ERA ever since. Tsehay Insurance,   to debar five insurance firms and seven      management chair at the Addis Abeba            awareness about the terms and conditions
Only 10 of the 18 insurance companies         along with four other insurance             commercial banks from issuing bonds          Institute of Technology.                       of demand guarantees,” says Zufan.
offer long-term insurance policies.           companies, was debarred by the Authority    earlier this year. Bunna, Lion, Abay,
                                              in March this year. Tsehay's managment      Berhan and Tsehay were insurers on           Most insurance firms do not require            Nib Insurance has also been involved in
Ethio Life Insurance was the only             had asked leaders of the Association of     the receiving end. The banks included        collateral from construction companies         legal wranglings with the Authority.
firm exclusively engaged in the long-         Ethiopian Insurers to negotiate with the    the Cooperative Bank of Oromia and           while issuing demand securities.
term insurance business since its             ERA on its behalf, two months after the     the state-owned Commercial Bank of                                                          Yehualashet Tamiru, an adjunct lecturer at
incorporation in 2008. However, a             decision of the ban was made.               Ethiopia (CBE), though these have since      “We assess their track record and              Addis Abeba University, agrees with Zufan.
lack of demand pushed the insurer to          The ban was lifted after Tsehay paid ERA    been reinstated.                             performance,” said the CEO of Tsehay
broaden its sphere by including non-life      earlier this month, Ashchalew Asfaw,        Insurance companies can only issue           Insurance.                                     “It might be difficult to grasp the terms,
insurance products in its portfolio four      legal director at the Authority, disclosed  conditional guarantee bonds, payable                                                        especially when it comes to conditional
years later. It was compelled to change its   to Fortune.                                 upon proof of breach of the contract         However, the same does not hold for            performance bonds," he said.
name to Ethio Life & General Insurance.       The Akir Construction saga is not the       terms. It was a practice instituted in       everyone in the industry. Nib Insurance
                                              only one involving Tsehay Insurance and     2004 after the insurance industry was        requires collateral covering 50pc to           Intended to bridge the awareness gap,
Non-life insurance has long dominated         the Authority, the latter operating with a  exposed to high risks with unconditional     100pc of the bond amount to issue a            the Association of Ethiopian Insurers
the industry. However, there has been         capital budget of 66.6 billion Br in the                                                 guarantee to contractors below grade           offered a three-day training for officials of
a shift in recent years, with long-term                                                                                                four, according to Zufan Abebe, CEO of         the Authority last week, given by experts
policies accounting for seven percent                                                                                                  Nib Insurance.                                 from the Africa Reinsurance Corporation,
of industry gross written premiums,                                                                                                                                                   based in Nigeria
up from five percent two years ago.                                                                                                    Nonetheless, disputes between insurers
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